Utilities and Energy

The saying goes that bigger is better, but in the utilities industry,
the effort to deregulate has shifted the focus to smaller, more agile and
competitive companies.

Since the early part of the 20th century, the production and distribution of
gas, electric and other power sources has been controlled by government.
Following the oil crisis of the 1970s and the breakup of the telecommunications
industry in the 1980s, industrial users of electricity lobbied for deregulation,
hoping for the lower prices that typically result when companies compete with
one another for customers. In 1996, an order from the Federal Energy Regulatory
Commission thrust deregulation into the industry's vocabulary, requiring energy
producers to allow all power marketers access to their transmission lines.

States such as California and Massachusetts were among the earliest to nudge
utility companies out of their regulated nests and into the open market. The
market consists of several segments, however, and the categories are in varying
stages of realignment. Power generators now compete with one another to sell
their product on the wholesale market to power marketers. These purchasers can
then sell to one another or directly to consumers. (The means for actually
distributing electricity, gas or water remains a regulated system; the
government doesn't want to see the country choked by new pipelines and
transmission wires.)

"The wholesale and retail markets have already been deregulated to a large
degree," says Michael Tyndall, media relations representative for Southern Co.
in Atlanta. "The residential [market] is being reviewed by different
legislatures on a state-by-state basis."

From a business standpoint, this stratification of the industry is causing
some corporate holding companies to acquire or otherwise establish subsidiaries
that allow them to address the distinct opportunities at each stage of the
process. For example, PG&E Corp., based in San Francisco, provides energy
services through its five affiliates: Pacific Gas and Electric Co., a gas and
electric utility; PG&E Energy Services, a retail energy services company; PG&E
Energy Trading, engaged in the wholesale purchase and resale of electricity and
natural gas; PG&E Gas Transmission, a non-utility subsidiary which manages
nearly 10,000 miles of gas pipelines; and U.S. Generating Co., an electricity
producer.

Power producers can be found in nearly every state, but among the other big
names producing and/or selling energy across regional boundaries are: Edison
International, in Rosemead, Calif.; Enron Corp., of Houston; Sempra Energy,
based in Los Angeles; and Southern Co., in Atlanta.

In addition to deregulation, another factor equally out of the industry's
control impacts utilities: the weather and its influence over consumer demand.
According to Hoover's Online, a business information Web site, last summer's
heat wave in the Midwest forced small power traders on the wholesale market to
default on promised electricity deliveries: "Their utility customers were
shocked by spot market prices soaring up to $7,500 per megawatt hour." Earlier
this year, a severe ice storm crippled Potomac Electric Power Co., in
Washington, D.C., leaving more than 200,000 of its customers in darkness for
days.

CURRENT NEEDS

Amid this instability, companies are searching for ways to remain valuable to
customers and operate efficiently. As a result, technological innovation has
gained importance in the utilities industry. At Southern Co., computers are used
in aspects as varied as customer service, automated plant operations, wholesale
energy trading and an emerging area automated mapping. Ken Carroll, staffing
analyst in Southern Co.'s Birmingham, Ala., office, explains: "If a customer
needs a new line [installed], instead of pulling drawings, schematics can be
accessed on site from a hand-held computer."

Southern Co. is also exploring environmental research, including electric
vehicle development. The industry is "substantially more technologically
oriented than it once was," Carroll says. "For the last 12 consecutive months,
our most frequent hire has been engineers."

Even non-utility producers are finding a market for their technologies.
Schlumberger RMS, in San Carlos, Calif., offers wireless meter-reading to
retail customers. The company claims to be adding nearly 100,000 meters to
its network each month.

In the already tight market for technical employees, utilities are elbowing
their way into hiring. Southern Co. has been recruiting at schools like Georgia
Tech, Auburn and Mississippi State, but has also expanded beyond its geographic
area to knock on the doors of schools in Michigan, Illinois and North and South
Carolina. "We need to attract top-notch employees," says Tyndall. "What we offer
in terms of salary and benefits has to be competitive."

Brian Hertzog, manager of corporate communications at U.S. Generating Co. in
Bethesda, Md., agrees that competition among all employers for graduates,
especially those with computer science experience, is tough and getting tougher.
"Our industry is like any other industry," he says. "We need good information
systems people."

Both employers' needs and the opportunities they offer are varied. Southern
Co.'s subsidiaries offering communications, computer services and plant design
capabilities all have openings. "We use just about every discipline, but
principally electrical, mechanical, industrial and computer engineering," says
Carroll.

"They could work in customer operations, working with the distributing system
of the company. They could work in the power plant, with the operation of the
generators, which is mostly for mechanical engineers. We can fit just about any
interest, from designing plants to working up to your knees in mud."

Eyeing opportunities overseas, power producers are also making the purchase
of power plants both domestically and overseas a priority. "Right now there is a
surge in new power plant development," comments Hertzog. "In anticipation of new
markets opening up, companies are planning to build plants to service those
markets."

"Through mergers and acquisitions, we are finding other utilities that fit
our mix," adds Carroll. "As we acquire international plants, we are sending
managers, marketing people and engineers there, but mostly senior people. They
need people with experience."

Still, knowledge of global issues and business demands does set a student
apart. "When we look at entry-level engineers, the primary things we are
interested in, besides their technical background, are good communication
skills, interpersonal skills and problem-solving skills," Carroll notes.

Part of the difficulty for these companies lies in convincing students that
the utilities field is dynamic and exciting, when some may shrug it off for a
more glamorous opportunity. "We are clearly dealing with cutting-edge
technologies on a daily basis," Carroll concludes.

CHARGING AHEAD

How can a student prepare him or herself for a career in this industry? Stay
abreast of these changes by plugging into such sources as the Energy Information
Administration, an independent research arm of the U.S. Department of Energy at
www.eia.doe.gov. Also
online is www.poweronline.com, an electronic magazine dedicated to the power
industry and featuring news and analysis, chat forums for professionals and a
career center that students intrigued by this fluid market might want to check
out.